Readers' comments

If anyone is going to read Piketty's book, they need to also read McCloskey's "Bourgeois Values" for a good economic history of the past 400 years. McCloskey shows that overage incomes in the West have grown by up to 100 times the level in 1600 in most Western countries and to lesser degrees in Asia, especially Japan and S. Korea.

Robert Fogel shows that inequality as measured by Gini was cut in half during the 19th century and even more in the 20th, but Piketty doesn't like Gini because it doesn't give him the results he wants so he has spent a great deal of effort massaging data until he gets the results that fit his socialist ideology.

The important point is that in the West per capita gdp is close to 100 times greater than the level in 1600 in spite of the fact that, if Piketty is correct, wealth concentration has not improved at all or grown worse. So the question should be, who cares? If per capita gdp can explode even while the wealthy increase their wealth concentration, why does it matter? rdmckinney.blogspot.com

Free markets = freedom to fail or in. Socialism fails over and over, and the socialist cry out "we need to try again!". When will the socialists give up their tireless pursuit? When will they tire of destroying economies, and more importantly, lives?

Free markets = freedom to fail or in. Socialism fails over and over, and the socialist cry out "we need to try again!". When will the socialists give up their tireless pursuit? When will they tire of destroying economies, and more importantly, lives?

Free markets = freedom to fail or in. Socialism fails over and over, and the socialist cry out "we need to try again!". When will the socialists give up their tireless pursuit? When will they tire of destroying economies, and more importantly, lives?

It's not a matter of wanting to 'try socialism again'. For the record I've personally achieved a modest slice of the pie and find myself mostly ambivalent toward the mostly clichéd stances of everyone left, right, and center, neo-liberals and their critics. Without being a leftist (I don't count myself among them) one can still reasonably conclude, from all the available historical evidence, along with intelligent communitarian-leaning conservatives, that libertarian capitalism is not a self-sufficient system for delivering a good society in which human beings can find happiness. It is reasonable to anyone who analyzes critically that all the neo-liberal happy-talk about the magical powers of the free market is a facade concealing a great degree of misery caused by low incomes among vast numbers of Americans.

I see a summary, I don't see much of a discussion yet.
element of context: the country that fits the best Mr Picketti vision ( with the exception of the tax system that he would like broader and even more redistributive than it is today, is France).

It sounds like "capitalists" are everyone who has savings. This means that the solution to inequality among individuals could be forces savings schemes, which make the poor save more than their current levels, thus making them mini-capitalists.

Good idea but difficult to implement in the current socioeconomic environment. Saving is not easy if you make a minimum wage. And even if one manages to save when push comes to shove the mini-capitalists will most likely lose to mega-capitalists.

I reckon modern-day capitalists are a more refined species. I don't disagree that those with savings, even superannuation or investments in shares, are aspirational capitalists. But do they really influence the means of production?

Rather, I regard these 'aspirationals' as the hoodwinked class. As long as they receive their dividend payment which is instantaneous gratification of a Return-on-Investment, and as long as they see preservation of their capital value when compared against similar investments, they will remain pacified.

Aspirational capitalists have no say on product or marketing strategy, and can usually be relied upon when the business owner makes mistakes or unpopular decisions that irritate wider society, regulators, etc. They are largely passive, and are a class that didn't exist during the times of Malthus or Marx. I remain intrigued about Picketty's analysis of their impact on modern Capital.

Forced savings do not make mini-capitalists. I recollect, from a bygone era, when a master craftsman with-held some of the wages of an apprentice until he was deemed to have qualified.

The schemes in Singapore and Australia are no different. I doubt you will find one worker, whose wages have been with-held in forced savings, who thinks they are a mini-capitalist. To the last man/woman, they know they are the 'other' factor of production. If not capital, what could it be?

Of course, they are the labour that makes the capital productive. Piketty's book is only about Capital, so I wouldn't expect to find much constructive content about Labour; I might be pleasantly surprised when we get into Chapter 1.

So I understand how catastrophic events destroy capital (and a lot of peoples lives) and therefore leave in their wake a more level playing field between capital and the surviving labor. If I am a carpenter and the house I am renting gets destroyed, I may be living in a tent, but I can be well employed to rebuild it while the owner has lost my rent. This makes sense as a model for postwar Europe and post cultural revolution China...what I don't see is how this explains the US experience. Was that much capital destroyed by the great depression in the US?

"Was that much capital destroyed by the great depression in the US?" No. Compare Figures 3.1 and 3.2 in the English translation of the book to Figure 4.6. These are also shown in a pdf from Piketty's Uni site (http://piketty.pse.ens.fr/files/Piketty2014Capital21c.pdf. The capital/income ratio (beta is Piketty's symbol) actually went up during the depression in the US but dipped during the WWII and then rose after 1950, but not as dramatically as in Britain and France.

"...the events of the period from 1914-1945. The chaos and policy shifts of the period wiped out much of the world's previously accumulated wealth and set the stage for a burst of rapid, broad-based growth."

Nothing like a hundred million or so deaths to revitalize the global economy.

I haven't read the book, but based on this description, I will be most interested to see whether his analysis leads to the conclusion that policy should focus more on how to generate faster growth to counteract this "natural state of affairs," or whether he accepts the premise of slower growth and thus recommends that policy focus on distribution within a slowly growing "pie."

Yes, it is a very informative piece - and such a welcome surprise to see that RA (wisely) omitted his standard closing paragraph, the one reciting his heart-felt plea for yet more QE.

Kuznets got it wrong - there is only a coincidental relationship between growth/innovation and wider income distribution. When John D. Rockefeller drove a stake through the hearts of the railroad moguls, he did so by making an innovative breakthrough in transportation, but he didn't accomplish anything in terms of wealth distribution - except in favor of himself. It's not quite the same way with the tech moguls now, who do employ large numbers of highly paid techies, while still leaving buckets of cash for the tech moguls to wallow in. But that's OK - they earned it; the same can't be said of real culprits in the current experience of wealth mal-distribution - the financial services industry ...

Finance has captured an all-time high share of total corporate profits - like 50% of the profits of corporate-America by some calculations. Do they earn that giant slice of the pie the way the tech moguls and Rocky do/did? IDTS. They acquired it by gaming the system and placing themselves in a position of being 'toll takers' on the financial bridges of the economy, while providing no more actual benefit to society than they ever have. That's a giant pot of money shared out among a very few, very ethically challenged individuals. When we fix that we'll have fixed a great deal of our inequality problem.

@MrR.Fox: Most sensible comment I've seen here. So how do we create political alignment amongst the middle classes and the productive capitalists to create reform around the unproductive capitalism of the financial industry?

When things get bad enough, and blatantly corrupt enough - the insurgency will precipitate around something - a crowd-sourced version of The Reign of Terror and The Holocaust, directed at largely the same kinds of people. It won't be pretty. Hope I live to see it - from afar in SEAsia.